Where are the chips falling, so to speak, when it comes to the popular State Children’s Health Insurance Program (SCHIP)? The press ought to be finding out, and fast. Last week, the Children’s Defense Fund sent me an invitation for an informational call discussing SCHIP’s future: “If the Senate doesn’t take a stand for children in the next days or weeks, our worst fears could clearly come to pass.” The dire-sounding invite piqued my interest, especially since I had read in the House bill that SCHIP would be repealed. What was going on?
It turns out that the House indeed wants to repeal the program and require kids to get coverage via the insurance exchange, the government’s soon-to-be gigantic brokerage service. Their parents, of course, would be getting subsidies to help buy coverage, courtesy of the U.S. taxpayer. Rep. John Dingell, a Democrat no less, touted the advantages of dumping SCHIP. One advantage: the program wouldn’t be subject to the periodic and occasionally problematic Congressional reauthorizations that threaten its existence. Dingell said kids could have the same insurance as their parents—an incentive to force parents to cover their kids. (Sometimes parents, daunted by bureaucratic red tape, don’t enroll their children even if they are eligible.)
Another reason for killing SCHIP, some believe, is to force kids into the new exchange’s risk pool. Kids are usually healthy; bringing them into the pool may help spread the risk and keep premiums somewhat lower for the sick people whom insurers would have to cover.
But in return, kids would be hurt, says Alison Buist, director of child health at the Children’s Defense Fund. She told me that if the House provision were to take effect, kids might lose some valuable and comprehensive benefits now available to kids on Medicaid and SCHIP. If parents, strapped for cash, had to shop in the exchange, they might choose low-cost insurance with skimpy benefits and pay more out-of-pocket than SCHIP currently requires them to pay. SCHIP rules limit a family’s out-of-pocket costs to five percent of their income. States don’t even impose the five percent, Buist said, because they have found parents with low incomes couldn’t pay that much. So it seems that there’s a cost shift here—making poor families pay more so that sick (and most likely older) people buying in the exchange would pay less.
First Focus, a children’s advocacy group, released a study by the consulting firm Watson Wyatt Worldwide which found that families, depending on their incomes, would pay between seven and thirty-five percent of their health costs out-of-pocket compared to two percent or less under SCHIP. Researchers concluded: “If children were moved from SCHIP to the exchange plans as currently drafted in the House and Senate, the out-of-pocket costs for children would increase rather dramatically.”
One of the few journalists to tackle the SCHIP problem, Atlanta Journal-Constitution columnist Cynthia Tucker, pointed out:
[T]he (new health insurance ) exchanges might easily be more expensive. Yes, many families would be eligible for subsidies; but there is no guarantee the policies for their children would be as affordable, or as comprehensive, as they are under the CHIP programs.
The Senate bill now allows SCHIP to continue until 2019, although the program would have to be reauthorized in 2013 when funding runs out. If the program is not adequately funded, Buist said, the Senate bill arrives “at the same functional outcome. Millions of kids would have to go to the exchange, and their parents could lose their cost-sharing protections.”
The Children’s Defense Fund has been trying to drum up support for an amendment offered by Sen. Bob Casey. The Casey amendment would guarantee full funding for SCHIP through 2019. By then Congress should know enough about the exchange to determine whether to dump SCHIP and require kids to obtain coverage through the government shopping service. Casey’s amendment would also give the states generous federal funding to eliminate barriers that now prevent families from enrolling their kids, and would preserve the program’s full package of medical and mental health services. In the end, the Defense Fund’s informational call did not take place, pending a score on the amendment from the Congressional Budget Office.